Book Description

The 2003 reform of the Common Agricultural Policy marked the culmination of a gradual reorientation of EU farm subsidies from product support to direct income support. A mid-term "Health Check" of this reform is now underway, exploring what further adjustments may be required for the period 2009 to 2013. The Commission's proposals for short-term adjustments to the CAP merit broad support. The Committee is not convinced of the long-term justification for maintaining direct subsidy payments in their present form, and advocates a phased reduction in direct payments over the course of the next financial period beginning in 2014. A significant proportion of the funds released should remain earmarked for the CAP, but be spent on the rural development element of the policy rather than on farm subsidies. The report also addresses the challenges and opportunities that lie ahead for the EU agriculture industry. The sector is a significant contributor to climate change, but also vulnerable to its effects. Climate change may present a business opportunity for the industry, which is uniquely placed to deliver environmental services. Soaring global demand for many agricultural commodities has allowed some sectors of the European farming industry to prosper, while others are grappling with rising input prices and stagnant or falling output prices. Were supply shortages to ensue in future, the Committee expects that food scarcity would be a function of income rather than of production capacity. Those most at risk are consumers on low incomes in the developing world. Further trade liberalisation in the agriculture sector is supported, but if direct payments are withdrawn and import tariffs reduced-as the UK Government advocates-then the production standards that EU producers of agricultural goods are obliged to meet should be re-examined.